February 20, 2019 / 9:03 AM / 9 months ago

Swiss manufacturers sound cautious note for 2019

ZURICH, Feb 20 (Reuters) - Trade conflicts and slowing demand in key markets have made Switzerland’s manufacturers nervous about the sector’s prospects this year.

Just under a third of mechanical and electrical engineering companies expect orders to increase during 2019 as Brexit and debt in many countries reduces demand, industry group Swissmem said on Wednesday.

The lower level of optimism, down from 53 percent expecting higher orders a year earlier, follows declining order intake at the back end of 2018.

“The stimuli for growth from abroad are not there,” Swissmem Director Stefan Brupbacher said.

“As a result of the general slowdown in many central markets, what we are thus likely to see is a sideways movement in business development for the MEM industries in the coming months,” he said.

Swiss industry, hit hard by the sudden surge in the Swiss currency four years ago and ongoing franc strength, continued its revival during 2018 with higher sales, orders and exports than a year earlier.

Companies in the sector also took on 7,800 extra staff, taking the overall number employed to 320,000 workers as orders rose 6.5 percent and sales increased 11.4 percent.

But growth decelerated during the year, with new orders falling 6 percent in the third quarter and 11.3 percent in the last three months of 2018.

The figures are the latest indication of a slowing manufacturing sector in Switzerland. The Swiss purchasing managers’ index fell to a seasonally adjusted 54.3 points in January, ten points lower than a year earlier.

Swissmem said Switzerland also needed to clarify its relationship with the European Union, by far the biggest market for its exports.

The government is consulting with interested parties on a possible treaty to sit atop dozens of bilateral accords granting enhanced Swiss access to the bloc’s single market.

“If the institutional framework agreement fails to materialise, the quality of Switzerland’s access to the EU single market will inevitably deteriorate,” Swissmem said.

“This will lead to a creeping loss of attractiveness for Switzerland as a place to do business, and it will lose out in terms of both jobs and prosperity,” it said. (Reporting by John Revill)

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